Retailers rely on holiday shoppers to drive fourth-quarter sales, but a new report suggests that consumer spending might be taking a dive this holiday season.
Only 16% of the 1,756 American consumers surveyed are willing to absorb the cost of tariffs and up their spending. With around 70% of shoppers planning to spend the same amount of money as they did last year, it’s likely that consumers will make fewer purchases this season.
There are other reasons for retailers to be pessimistic about the holidays: Speaking with FN’s sister publication Sourcing Journal, Wells Fargo retail analyst Ike Boruchow noted that warmer temperatures could spell bad news for weather-sensitive categories, and tourist spending is expected to drop with the United States dollar stronger than most other currencies. Additionally, the holiday calendar is condensed this year, thanks to six days fewer between Thanksgiving and Christmas compared with 2018. (In 2013, the last time the sector saw a shorter season, retailers recorded slower comp sales for Q4.)
However, not all early reports indicate dismal news for retailers in the fourth quarter. An August study from customer journey optimization firm Yieldify showed that U.S. stores are optimistic about the holidays, predicting an average year-over-year revenue rise of 28%. Around half (or 49%) of retailers surveyed indicated an expected revenue boost this Black Friday of between 25% and 75% over last year.
Marking the latest development in the ongoing U.S.-China trade war, the latest set of tariffs — 15% duties on $112 billion of Chinese goods — went into effect on Sept. 1. The stock market slumped in response to the new levies, with the Dow Jones Industrial Average opening down more than 260 points this morning.
While Trump has indicated that China will pay for the tariffs, American consumers end up bearing the brunt of the taxes. The latest tranche impacts categories shoppers often turn to for holiday gifting, including footwear and apparel as well as toys, electronics and other accessories.
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